Kirkham v. Bank of America

• Decision Date: 04 December 1900
• Citation: 58 N.E. 753,165 N.Y. 132
• Parties: KIRKHAM v. BANK OF AMERICA.
• Court: New York Court of Appeals Court of Appeals

165 N.Y. 132

58 N.E. 753

KIRKHAM

v.BANK OF AMERICA.

Court of Appeals of New York.

Dec. 4, 1900.

Appeal from supreme court, appellate division, First department.

Action by Henry P. Kirkham against the Bank of America. From a judgment of the appellate division (49 N. Y. Supp. 767) reversing a judgment of the trial term in favor of defendant, defendant appeals. Affirmed.

The complaint sets forth the receipt on October 25, 1890, from one Blanchard of a sight draft for $3,120, drawn by the Interstate Investment Company upon the Bank of South Hutchinson, Kan., and its deposit by the plaintiff with the defendant for collection; that the defendant forwarded it to its agent, the Boatmen's Bank of St. Louis, Mo., which, in turn, forwarded it to its agent, the First National Bank of Hutchinson, Kan.; that, upon its receipt by the lastnamed bank, it was presented to the drawee bank, which accepted it, and thereupon it was surrendered, and there was received back in payment a demand check of the drawee upon the Merchants' Exchange National Bank of New York City, payable to the order of the First National Bank of Hutchinson; that on November 3, 1890, the defendant notified the plaintiff that, as advised by the Boatmen's Bank of St. Louis, the draft had been paid, and thereupon an entry of its amount was made by the defendant in the plaintiff's pass book as a cashdeposit item, and as an amount on deposit to his credit; that, upon the check being thereafter presented by the defendant to the Merchants' Exchange National Bank, payment thereof was refused because of insufficient funds; and that the defendant thereafter refused to pay to the plaintiff the amount of the draft. The complaint charges, for a first cause of action, that the failure to collect the amount of the draft was due to the negligent act of the defendant in accepting payment through its agent of the draft by check, instead of in cash, and that it is liable to the plaintiff for the amount of the check. For a second cause of action, it charges the defendant with a liability to the plaintiff in damages to the amount of the draft, in that, upon nonpayment of the check received from the drawee in payment of the draft, it became the defendant's duty to forthwith return the check, and to demand of the South Hutchinson Bank the draft which had been deposited for collection, in consequence of the defendant's failure to do which, and to restore the draft, the plaintiff was unable to enforce its payment against Blanchard, who was liable upon the able to pay it. Upon the trial these facts were stipulated: That the defendant's agent, the Boatmen's Bank of St. Louis, had received from its agent in Hutchinson the check of the South Hutchinson Bank, drawee of the draft, to the order of the Boatmen's Bank; that thereupon the latter credited the defendant with the amount of the check, subject to its payment, and forwarded it to the defendant, with notice to that effect; that the defendant, upon its receipt on November 3, 1890 credited its amount to the Boatmen's Bank; that on the same day of its receipt the defendant credited the amount of the draft to the plaintiff; that the check was presented on November 5, 1890, by the defendant to the Merchants' Bank, upon which it was drawn, and payment thereof was refused, and the same was protested; that thereupon the respective credits which the defendant and the Boatmen's Bank had given to each other in account were charged off, and the credit for the amount which the defendant had given to the plaintiff on November 3d was on November 26th, thereafter, canceled by the defendant. The plaintiff testified that the draft received by him from Blanchard, and which he had deposited with the defendant, was indorsed by him (Blanchard) with the words ‘Personally guarantied.’ It appeared that after the check of the South Hutchinson Bank had been refused payment the defendant continued to retain it, and that on November 11th it requested the plaintiff, by letter, to call in reference to the matter of his collection. During the period of time from November 5th to November 26th, representations were made by Blanchard relating to the forwarding of remittances to pay the check, and promises were made by him that he would raise the money, of which the plaintiff had knowledge. For the defendant the custom was proved that, where a New York bank undertakes the collection of a draft out of New York City, the drawee bank pays the draft upon itself by return exchange upon New York City, which in some instances, but not always, is made in the draft or check of the drawee bank itself; that such a draft or check of the drawee bank would be generally drawn to the order of the collecting agent of the bank with which the draft had been deposited for collection. Whether the custom obtained in the case of indorsed paper was not stated. At the conclusion of the case, the trial being had before a judge without a jury, the complaint was dismissed, and upon appeal to the appellate division, in the First department, the judgment was reversed and a new trial ordered;...